FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

                  For the quarterly period ended June 30, 2001
   --------------------------------------------------------------------------

                                       OR

             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from _________________________ to ____________________


                             Commission file number
                                     0-21558
                     ---------------------------------------


                            CNL Income Fund XII, Ltd.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                       Florida                                   59-3078856
---------------------------------------------- ---------------------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


450 South Orange Avenue
Orlando, Florida                                                    32801
---------------------------------------------- ---------------------------------
      (Address of principal executive offices)                   (Zip Code)


Registrant's telephone number
(including area code)                                          (407) 540-2000
                                               ---------------------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _________




                                    CONTENTS

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Part I                                                                                 Page
                                                                                       ----

   Item 1.    Financial Statements:

                  Condensed Balance Sheets                                              1

                  Condensed Statements of Income                                        2

                  Condensed Statements of Partners' Capital                             3

                  Condensed Statements of Cash Flows                                    4

                  Notes to Condensed Financial Statements                               5-8

   Item 2.    Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                   9-13

   Item 3.   Quantitative and Qualitative Disclosures About
                  Market Risk                                                           13

Part II

   Other Information                                                                    14-15

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                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
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                                                                                June 30,              December 31,
                                                                                  2001                    2000
                                                                           --------------------    --------------------
                                ASSETS

    Land and buildings on operating leases, less
        accumulated depreciation of $2,744,595 and
        $2,525,455, respectively                                                  $ 21,785,762            $ 21,239,166
    Net investment in direct financing leases, less
        allowance for loss on assets of $64,518 in 2001                              8,815,533               9,740,755
    Investment in joint ventures                                                     4,682,871               4,673,593
    Mortgage note receivable                                                                --                  45,375
    Cash and cash equivalents                                                        1,221,902               1,161,018
    Certificates of deposit                                                            528,191                 511,277
    Receivables, less allowance for doubtful accounts
        of $88,452 and $30,338, respectively                                            12,787                 192,518
    Due from related parties                                                            60,605                  28,054
    Prepaid expenses                                                                    15,210                  30,903
    Lease costs, less accumulated amortization
        of $14,162 and $11,490, respectively                                            48,261                  50,933
    Accrued rental income, less allowance for doubtful
        accounts of $85,505 and $161,604, respectively                               2,542,213               2,645,628
                                                                           --------------------    --------------------

                                                                                  $ 39,713,335            $ 40,319,220
                                                                           ====================    ====================

                   LIABILITIES AND PARTNERS' CAPITAL

    Accounts payable                                                                $   17,111              $   39,360
    Accrued and escrowed real estate taxes payable                                      25,287                   8,853
    Distributions payable                                                              956,252                 956,252
    Due to related parties                                                             117,569                  22,808
    Rents paid in advance and deposits                                                 120,295                  85,863
                                                                           --------------------    --------------------
        Total liabilities                                                            1,236,514               1,113,136

    Commitment (Note 8)

    Partners' capital                                                               38,476,821              39,206,084
                                                                           --------------------    --------------------

                                                                                  $ 39,713,335            $ 40,319,220
                                                                           ====================    ====================

See accompanying notes to condensed financial statements.
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                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME

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                                                                    Quarter Ended                    Six Months Ended
                                                                       June 30,                          June 30,
                                                                2001              2000             2001             2000
                                                            --------------     ------------   ---------------   -------------
Revenues:
    Rental income from operating leases                        $  687,141        $ 678,728       $ 1,433,619     $ 1,384,467
    Adjustments to accrued rental income                               --               --          (297,747 )            --
    Earned income from direct financing leases                    229,045          324,241           494,818         620,740
    Contingent rental income                                          485              947             4,608           1,714
    Interest and other income                                      17,761           16,392            46,494          61,881
                                                            --------------     ------------   ---------------   -------------
                                                                  934,432        1,020,308         1,681,792       2,068,802
                                                            --------------     ------------   ---------------   -------------

Expenses:
    General operating and administrative                           87,115           60,619           231,169         109,200
    Professional services                                          10,746            5,548            42,243          19,970
    Management fees to related party                               10,309           10,898            20,978          21,576
    Real estate taxes                                               4,018               --            17,829              --
    State and other taxes                                          10,976              131            59,150          20,834
    Depreciation and amortization                                 110,905          101,375           221,812         198,656
    Transaction costs                                                  --           30,882                --          77,277
                                                            --------------     ------------   ---------------   -------------
                                                                  234,069          209,453           593,181         447,513
                                                            --------------     ------------   ---------------   -------------

Income Before Equity in Earnings of Joint Ventures,
    Gain on Sale of Assets and Provision for Loss of
    Assets                                                        700,363          810,855         1,088,611       1,621,289

Equity in Earnings of Joint Ventures                               96,087           82,187           159,148         160,259

Gain on Sale of Assets                                                 --               --                --         147,633

Provision for Loss on Assets                                      (64,518 )             --           (64,518 )            --
                                                            --------------     ------------   ---------------   -------------


Net Income                                                     $  731,932        $ 893,042       $ 1,183,241     $ 1,929,181
                                                            ==============     ============   ===============   =============

Allocation of Net Income:
    General partners                                              $    --           $   --           $    --         $    --
    Limited partners                                              731,932          893,042         1,183,241       1,929,181
                                                            --------------     ------------   ---------------   -------------

                                                               $  731,932        $ 893,042       $ 1,183,241     $ 1,929,181
                                                            ==============     ============   ===============   =============

Net Income Per Limited Partner Unit                             $    0.16         $   0.20         $    0.26       $    0.43
                                                            ==============     ============   ===============   =============

Weighted Average Number of Limited
    Partner Units Outstanding                                   4,500,000        4,500,000         4,500,000       4,500,000
                                                            ==============     ============   ===============   =============

See accompanying notes to condensed financial statements.
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                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL

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                                                                             Six Months Ended            Year Ended
                                                                                 June 30,               December 31,
                                                                                   2001                     2000
                                                                          ------------------------   -------------------

     General partners:
         Beginning balance                                                          $     259,109            $  259,109
         Net income                                                                            --                    --
                                                                          ------------------------   -------------------
                                                                                          259,109               259,109
                                                                          ------------------------   -------------------

     Limited partners:
         Beginning balance                                                             38,946,975            38,951,767
         Net income                                                                     1,183,241             3,820,216
         Distributions ($0.43 and $0.85 per
            limited partner unit, respectively)                                        (1,912,504 )          (3,825,008 )
                                                                          ------------------------   -------------------
                                                                                       38,217,712            38,946,975
                                                                          ------------------------   -------------------

     Total partners' capital                                                       $   38,476,821          $ 39,206,084
                                                                          ========================   ===================

See accompanying notes to condensed financial statements.
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                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS
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                                                                                          Six Months Ended
                                                                                              June 30,
                                                                                      2001                2000
                                                                                 ---------------     ----------------

       Increase (Decrease) in Cash and Cash Equivalents

           Net Cash Provided by Operating Activities                                 $1,955,977           $1,969,359
                                                                                 ---------------     ----------------

           Cash Flows from Investing Activities:
              Proceeds from sale of assets                                                   --              791,450
              Additions to land and buildings on operating
                 leases                                                                      --           (1,009,067 )
              Investment in joint venture                                            (1,689,609 )                 --
              Return of capital from joint venture                                    1,663,260                   --
              Collections on mortgage note receivable                                    43,760                4,551
                                                                                 ---------------     ----------------
                     Net cash provided by (used in) investing
                         activities                                                      17,411             (213,066 )
                                                                                 ---------------     ----------------

           Cash Flows from Financing Activities:
              Distributions to limited partners                                      (1,912,504 )         (1,912,504 )
                                                                                 ---------------     ----------------
                     Net cash used in financing activities                           (1,912,504 )         (1,912,504 )
                                                                                 ---------------     ----------------

       Net Increase (Decrease) in Cash and Cash
           Equivalents                                                                   60,884             (156,211 )

       Cash and Cash Equivalents at Beginning of Period                               1,161,018            1,870,366
                                                                                 ---------------     ----------------

       Cash and Cash Equivalents at End of Period                                    $1,221,902           $1,714,155
                                                                                 ===============     ================

       Supplemental Schedule of Non-Cash Financing
           Activities:

              Distributions declared and unpaid at end of
                 period                                                               $ 956,252            $ 956,252
                                                                                 ===============     ================
See accompanying notes to condensed financial statements.
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                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 2001 and 2000


1.       Basis of Presentation:

         The accompanying unaudited condensed financial statements have been
         prepared in accordance with the instructions to Form 10-Q and do not
         include all of the information and note disclosures required by
         generally accepted accounting principles. The financial statements
         reflect all adjustments, consisting of normal recurring adjustments,
         which are, in the opinion of management, necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the quarter and six months ended June 30, 2001, may not be indicative
         of the results that may be expected for the year ending December 31,
         2001. Amounts as of December 31, 2000, included in the financial
         statements, have been derived from audited financial statements as of
         that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund XII, Ltd. (the "Partnership") for the year ended December
         31, 2000.

2.       Reclassification:
         ----------------

         Certain items in the prior year's financial statements have been
         reclassified to conform to 2001 presentation. These reclassifications
         had no effect on total partners' capital or net income.

3.       Land and Buildings on Operating Leases:

         Effective January 2001, the Partnership terminated the lease relating
         to its property in Albany, Georgia. As a result, the Partnership
         reclassified the building portion of this asset from net investment in
         direct financing lease to building on operating lease. In accordance
         with statement of Financial Accounting Standards No. 13, "Accounting
         for Leases," the Partnership recorded the reclassified asset at the
         lower of original cost, present fair value, or present carrying value.
         No loss on reclassification of direct financing lease was recorded for
         financial reporting purposes. In connection therewith, the Partnership
         entered into a new lease with a new tenant with lease terms
         substantially the same as the Partnership's other leases.

4.       Net Investment in Direct Financing Leases:
         -----------------------------------------

         At June 30, 2001, the Partnership established an allowance for
         impairment in carrying value in the amount of $64,518 for its property
         in Winter Haven, Florida as a result of the tenant vacating the
         property and ceasing restaurant operations. The allowance





                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 2001 and 2000


4.       Net Investment in Direct Financing Leases - Continued:
         -----------------------------------------------------

         represented the difference between the carrying value of the net
         investment in the direct financing lease at June 30, 2001 and the
         estimated net realizable value for the property.

5.       Investment in Joint Ventures:
         ----------------------------

         In March 2001, Middleburg Joint Venture, in which the Partnership owned
         a 87.54% interest, sold its property to the tenant, in accordance with
         the purchase option under the lease agreement, for $1,900,000. Due to
         the fact that the joint venture had recorded accrued rental income,
         representing non-cash amounts that the joint venture had recognized as
         income since the inception of the lease relating to the straight-lining
         of future scheduled rent increases in accordance with generally
         accepted accounting principles, a loss of approximately $61,900 was
         recorded for financial reporting purposes in March 2001. The property
         was originally contributed to Middleburg Joint Venture in May 1996 and
         had a total cost of approximately $1,878,860, excluding acquisition
         fees and miscellaneous acquisition expenses. The Partnership dissolved
         the joint venture in accordance with the Partnership agreement and did
         not recognize a gain or loss on the dissolution.

         In April 2001, the Partnership used the proceeds received from the
         return of capital as described above to invest in a joint venture
         arrangement, CNL VIII, X, XII Kokomo Joint Venture, with CNL Income
         Fund VIII, Ltd. and CNL Income Fund X, Ltd. to purchase and hold one
         restaurant property. The joint venture acquired this property from CNL
         BB Corp., an affiliate of the general partners (see Note 7). Each of
         the CNL Income Funds is an affiliate of the general partners and a
         Florida limited partnership pursuant to the laws of the state of
         Florida. The Partnership accounts for its investment using the equity
         method since the Partnership shares control with affiliates. As of June
         30, 2001, the Partnership owned an 80 percent interest in the profits
         and losses of the joint venture.


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 2001 and 2000


5.       Investment in Joint Ventures - Continued:
         ----------------------------------------

         The following presents the combined, condensed financial information
         for all of the Partnerships investments in joint ventures at:

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                                                                           June 30,               December 31,
                                                                             2001                     2000
                                                                     ---------------------     -------------------

           Land and buildings on operating leases,
                less accumulated depreciation and
                allowance for loss on assets                                $   7,668,289            $  6,153,743
           Net investment in direct financing lease                               643,617               1,926,938
           Cash                                                                   116,282                  85,033
           Receivables                                                             13,874                     193
           Prepaid expenses                                                         2,518                      --
           Accrued rental income                                                  165,324                 294,356
           Other assets                                                                --                     741
           Liabilities                                                             40,081                  54,005
           Partners' capital                                                    8,569,823               8,406,999
           Revenues                                                               469,549                 779,865
           Loss on sale of assets                                                 (61,864 )                    --
           Net income                                                             325,205                 658,303

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         The Partnership recognized income totaling $159,148 and $160,259 for
         the six months ended June 30, 2001 and 2000, respectively, from these
         joint ventures, of which $96,087 and $82,187, was earned during the
         quarters ended June 30, 2001 and 2000, respectively.

6.       Mortgage Note Receivable:
         ------------------------

         During 1999, the Partnership had accepted a promissory note in
         connection with the 1999 sale of one of its properties. During the six
         months ended June 30, 2001, the Partnership collected the outstanding
         principal and interest balance of $45,375 relating to this promissory
         note.

7.       Related Party Transactions:
         --------------------------

         During the six months ended June 30, 2001, the Partnership, CNL Income
         Fund VIII, Ltd., and CNL Income Fund X, Ltd. invested in a joint
         venture arrangement, CNL VIII, X, XII Kokomo Joint Venture to acquire a
         Golden Corral property from CNL BB Corp.,





                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 2001 and 2000


7.       Related Party Transactions - Continued:
         --------------------------------------

          an affiliate of the general  partners  for a total  purchase  price of
          $2,112,011.  CNL Income Fund VIII,  Ltd.,  and CNL Income Fund X, Ltd.
          are each Florida  limited  partnerships  and affiliates of the general
          partners.  CNL BB Corp.  had purchased and  temporarily  held title to
          this property in order to facilitate  the  acquisition of the property
          by the joint  venture.  The purchase  price paid by the joint  venture
          represents the costs incurred by CNL BB Corp. to acquire and carry the
          property, including closing costs. In accordance with the Statement of
          Policy  of Real  Estate  Programs  for the North  American  Securities
          Administrators  Association,  Inc., all income, expenses,  profits and
          losses  generated by or associated with the property,  were treated as
          belonging  to the joint  venture.  For the six  months  ended June 30,
          2001,  other  income of the joint  venture  included  $11,887  of such
          amounts.

8.      Commitment:
        ----------

          In May  2001,  the  Partnerhsip  entered  into  an  agreement  with an
          unrelated  third party to sell the property in Winter Haven,  Florida.
          At June 30, 2001, the Partnership  established a provision for loss on
          assets related to the anticipated  sale of this property (see Note 4).
          As of July 31, 2001, the sale had not occurred.

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

         CNL Income Fund XII, Ltd. (the "Partnership") is a Florida limited
Partnership that was organized on August 20, 1991, to acquire for cash, either
directly or through joint venture and tenancy in common arrangements, both newly
constructed and existing restaurants, as well as Properties upon which
restaurants were to be constructed (the "Properties"), which are leased
primarily to operators of national and regional fast-food and family-style
restaurant chains. The leases are generally triple-net leases, with the lessees
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of June 30, 2001, the Partnership owned 48 Properties, which
included interests in six Properties owned by joint ventures in which the
Partnership is a co-venturer and one Property owned with affiliates of the
general partners as tenants-in-common.

Capital Resources

         The Partnership's primary source of capital for the six months ended
June 30, 2001 and 2000 was cash from operations (which includes cash received
from tenants, distributions from joint ventures, and interest and other income
received, less cash paid for expenses). Cash from operations was $1,955,977 and
$1,969,359 for the six months ended June 30, 2001 and 2000, respectively. The
decrease in cash from operations for the six months ended June 30, 2001, as
compared to the six months ended June 30, 2000, was primarily a result of
changes in income and expenses as described in "Results of Operations" below and
changes in the Partnership's working capital.

         Other sources and uses of capital included the following during the six
months ended June 30, 2001.

         During 1999, the Partnership had accepted a promissory note in
connection with the 1999 sale of one of its Properties. During the six months
ended June 30, 2001, the Partnership collected the outstanding principal balance
of $43,760 relating to this promissory note.

         In March 2001, Middleburg Joint Venture, in which the Partnership owned
a 87.54% interest, sold its Property to the tenant in accordance with the option
under its lease agreement to purchase the Property, for $1,900,000. Due to the
fact that the joint venture had recorded accrued rental income, representing
non-cash amounts that the joint venture had recognized as income since the
inception of the lease relating to the straight-lining of future scheduled rent
increases in accordance with generally accepted accounting principles, a loss of
approximately $61,900 was recorded for financial reporting purposes in March
2001. As a result, the Partnership received approximately $1,663,300 as a return
of capital representing its 87.54% share of the liquidation proceeds of the
joint venture. In April 2001, Middleburg Joint Venture was dissolved in
accordance with the joint venture agreement. No gain or loss on the dissolution
of the joint venture was recorded. In April 2001, the Partnership used these
proceeds to invest in a joint venture arrangement, CNL VIII, X, XII Kokomo Joint
Venture, to acquire a Property in Kokomo, Indiana with CNL Income Fund VIII,
Ltd. and CNL Income Fund X, Ltd., each of which is a Florida limited partnership
and an affiliate of the general partners. The joint venture acquired this
Property from CNL BB Corp., an affiliate of the general partners. The affiliate
had purchased and temporarily held title to the Property in order to facilitate
the acquisition of the Property by the joint venture. The purchase price paid by
the joint venture represented the costs incurred by the affiliate to acquire the
Property, including closing costs. As of June 30, 2001, the Partnership had
contributed approximately $1,689,600 to acquire the restaurant Property for an
80 percent interest in the profits and losses of the joint venture.

         Currently, cash reserves, rental income from the Partnership's
Properties and any amounts collected from the promissory note are invested in
money market accounts or other short-term, highly liquid investments, such as
demand deposit accounts at commercial banks, money market accounts and
certificates of deposit with less than a 30-day maturity date, pending the
Partnership's use of such funds to pay Partnership expenses or to make
distributions to the partners. At June 30, 2001, the Partnership had $1,221,902
invested in such short-term investments, as compared to $1,161,018 at December
31, 2000. The funds remaining at June 30, 2001, will be used to pay
distributions and other liabilities of the Partnership.

          In May  2001,  the  Partnership  entered  into  an  agreement  with an
unrelated third party to sell its Property in Winter Haven,  Florida. As of July
31, 2001, the sale had not occurred.

Short-Term Liquidity

         The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.

         The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who meet specified
financial standards minimizes the Partnership's operating expenses. The general
partners believe that the leases will continue to generate cash flow in excess
of operating expenses.

         The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.

         The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current cash from operations the Partnership declared distributions to
the limited partners of $1,912,504 for each of the six months ended June 30,
2001 and 2000, respectively, ($956,252 for each of the quarters ended June 30,
2001 and 2000). This represents distributions for each of the six months ended
June 30, 2001 and 2000 of $0.43 per unit ($0.21 per unit for each applicable
quarter). No distributions were made to the general partners for the quarters
and six months ended June 30, 2001 and 2000. No amounts distributed to the
limited partners for the six months ended June 30, 2001 and 2000 are required to
be or have been treated by the Partnership as a return of capital for purposes
of calculating the limited partners' return on their adjusted capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to the limited partners on a quarterly basis.

         Total liabilities of the Partnership increased to $1,236,514 at June
30, 2001, from $1,113,136 at December 31, 2000, primarily as a result of an
increase in accrued and escrowed real estate taxes, rents paid in advance and
amounts due to related parties at June 30, 2001, as compared to December 31,
2000. The increase was partially offset by a decrease in accounts payable at
June 30, 2001, as compared to December 31, 2000. Total liabilities at June 30,
2001, to the extent they exceed cash and cash equivalents at June 30, 2001, will
be paid from future cash from operations, and in the event the general partners
elect to make additional contributions or loans from general partner's
contributions or loans.

Long-Term Liquidity

         The Partnership has no long-term debt or other long-term liquidity
requirements.

Results of Operations

         During the six months ended June 30, 2000, the Partnership owned and
leased 43 wholly owned Properties (which included two Properties sold during
2000) and during the six months ended June 30, 2001, the Partnership owned and
leased 41 wholly owned Properties to operators of fast-food and family-style
restaurant chains. In connection therewith, during the six months ended June 30,
2001 and 2000, the Partnership earned $1,630,690 and $2,005,207, respectively,
in rental income from operating leases (net of adjustments to accrued rental
income) and earned income from direct financing leases from these Properties, of
which $916,186 and $1,002,969 was earned during the quarters ended June 30, 2001
and 2000, respectively. The decrease in rental and earned income during the six
months ended June 30, 2001, as compared to the six months ended June 30, 2000,
was partially due to the fact that during the six months ended June 30, 2001,
the tenant of the Property in Albany, Georgia terminated its lease. As a result
of the lease termination, the Partnership reversed approximately $155,000 in
accrued rental income relating to this Property. The accrued rental income was
the accumulated amount of non-cash accounting adjustments previously recorded in
order to recognize future scheduled rent increases as income evenly over the
term of the lease. The Partnership simultaneously re-leased the Property to a
new tenant with lease terms substantially the same as the Partnership's other
leases. In addition, the decrease in rental and earned income during the six
months ended June 30, 2001, was partially attributable to the fact that in April
2001, the tenant of the Property in Winter Haven, Florida vacated the Property
and ceased making rental payments on this Property. As a result, during the six
months ended June 30, 2001, the Partnership reversed approximately $142,500 in
accrued rental income relating to this Property. The accrued rental income was
the accumulated amount of non-cash accounting adjustments previously recorded in
order to recognize future scheduled rent increases as income evenly over the
term of the lease. In addition, the decrease in rental and earned income during
the quarter and six months ended June 30, 2001 as compared to the quarter and
six months ended June 30, 2000 was also partially due to the fact that the
Partnership established an allowance for doubtful accounts for past due rental
amounts relating to this Property. The general partners will continue to pursue
collection of past due rental amounts relating to this Property and will
recognize such amounts as income if collected. The general partners will not
record rental and earned income relating to this Property until a replacement
tenant is located or until the Property is sold and the sales proceeds are
reinvested in an additional Property. The general partners are currently seeking
a new tenant or purchaser for this Property. The general partners expect that
rental and earned income will remain at reduced levels until the Property is
re-leased or sold. No such amounts were reversed or reserved during the six
months ended June 30, 2000 relating to this Property.

         In 1998, Long John Silver's, Inc. filed for bankruptcy, rejected the
leases relating to three of the eight Properties it leased, and ceased making
rental payments to the Partnership. Subsequently, two of the three Properties
with rejected leases were sold and one was re-leased to a new tenant. In 1999,
Long John Silver's, Inc. assumed and affirmed its five remaining leases and the
Partnership has continued to receive rental payments relating to these five
leases. The decrease in rental and earned income during the six months ended
June 30, 2001, as compared to the quarter and six months ended June 30, 2000,
was partially attributable to the fact that during 2000, the Partnership
received approximately $55,600 in bankruptcy proceeds relating to the Properties
whose leases were rejected in 1998, as described above. No such proceeds were
received during the six months ended June 30, 2001.

         In addition, rental income decreased during the quarter and six months
ended June 30, 2001, as compared to the quarter and six months ended June 30,
2000, as a result of the 2000 sales of the Properties in Bradenton, Florida and
Cleveland, Tennessee. The decrease was partially offset by an increase in rental
and earned income during the quarter and six months ended June 30, 2001 as a
result of the Partnership reinvesting a portion of these net sales proceeds in a
Property in Pooler, Georgia in April 2000.

         In addition, during the quarters ended June 30, 2001 and 2000, the
Partnership owned and leased six Properties (including one Property which was
sold in 2001) indirectly through joint venture arrangements and one Property as
tenants-in-common with the affiliates of the general partners. In connection
therewith, during the six months ended June 30, 2001 and 2000, the Partnership
earned $159,148 and $160,259, respectively, attributable to net income earned by
joint ventures, $96,087 and $82,187 of which was earned during the quarters
ended June 30, 2001 and 2000, respectively. The decrease in net income earned by
these joint ventures during the six months ended June 30, 2001, as compared to
the six months ended June 30, 2000, was primarily attributable to the fact that
in March 2001, Middleburg Joint Venture in which the Partnership owns a 87.54%
interest, recognized a loss of approximately $61,900 for financial reporting
purposes as the result of the sale of its Property, as described above in
"Capital Resources". The decrease in net income earned by these joint ventures
during the six months ended June 30, 2001 was partially offset by, and the
increase in net income earned by joint ventures during the quarter ended June
30, 2001, as compared to the quarter ended June 30, 2000, was primarily due to,
the fact that in August 2000, the Partnership invested in a Property in Colorado
Springs, Colorado, as tenants-in-common with CNL Income Fund VII, Ltd., a
Florida limited partnership and an affiliate of the general partners, and in
April 2001, the Partnership invested in a joint venture arrangement, CNL VIII,
X, XII Kokomo Joint Venture, as described above in "Capital Resources".

         Operating expenses, including depreciation and amortization expense,
were $593,181 and $447,513 for the six months ended June 30, 2001 and 2000,
respectively, of which $234,069 and $209,453 were incurred during the quarters
ended June 30, 2001 and 2000, respectively. The increase in operating expenses
during the quarter and six months ended June 30, 2001, as compared to the
quarter and six months ended June 30, 2000, was partially attributable to an
increase in the costs incurred for administrative expenses for servicing the
Partnership and its Properties, as permitted by the Partnership agreement. In
addition, the increase in operating expenses during the quarter and six months
ended June 30, 2001, as compared to the quarter and six months ended June 30,
2000, was partially attributable to an increase in state taxes incurred by the
Partnership due to changes in the tax laws of a state in which the Partnership
conducts business.

         Operating expenses also increased during the quarter and six months
ended June 30, 2001, as compared to the quarter and six months ended June 30,
2000, due to an increase in depreciation expense. In January 2001, the
Partnership terminated the lease relating to its Property in Albany, Georgia and
reclassified the asset from net investment in direct financing lease to land and
building on operating lease. The Property was re-leased to a new tenant in
January 2001. In accordance with Statement of Financial Accounting Standards No.
13, "Accounting for Leases," the Partnership recorded the reclassified asset at
the lower of original cost, present fair value or present carrying amount. No
loss on reclassification was recorded during the six months ended June 30, 2001.
In addition, the Partnership incurred certain expenses such as legal fees, real
estate taxes, insurance and maintenance relating to the Property in Winter
Haven, Florida as a result of the tenant vacating the Property, as described
above. The Partnership will continue to incur these expenses until a new tenant
or purchaser is located. The general partners are currently seeking a
replacement tenant or purchaser for this Property.

         The increase in operating expenses during the quarter and six months
ended June 30, 2001 was partially offset by the fact that during the quarter and
six months ended June 30, 2000, the Partnership incurred $30,882 and $77,277,
respectively in transaction costs related to the general partners retaining
financial and legal advisors to assist them in evaluating and negotiating the
proposed merger with CNL American Properties Fund, Inc. ("APF"). On March 1,
2000, the general partners and APF mutually agreed to terminate the merger. No
such expenses were incurred during the quarter and six months ended June 30,
2001.

         As a result of the sale of the Property in Cleveland, Tennessee, the
Partnership recorded a gain of $147,633 for financial reporting purposes during
the six months ended June 30, 2000. No Properties were sold during the six
months ended June 30, 2001.

         During the quarter and six months ended June 30, 2001, the Partnership
recorded a provision for loss on assets in the amount of $64,518 for financial
reporting purposes relating to the Property in Winter Haven, Florida. The tenant
vacated this Property and ceased payment of rents under the terms of its lease
agreement. The allowance represented the difference between the carrying value
of the Property at June 30, 2001 and the estimated net realizable value for the
Property.


ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Inapplicable.




                           PART II. OTHER INFORMATION


Item 1. Legal Proceedings.   Inapplicable.
        ------------------

Item 2. Changes in Securities.       Inapplicable.
        --------------------------

Item 3. Default upon Senior Securities.   Inapplicable.
        -------------------------------

Item 4. Submission of Matters to a Vote of Security Holders.   Inapplicable.
        ----------------------------------------------------

Item 5. Other Information.   Inapplicable.
        ------------------

Item 6. Exhibits and Reports on Form 8-K.
        ---------------------------------

     (a)  Exhibits

     3.1  Affidavit and  Certificate  of Limited  Partnership of CNL Income Fund
          XII,  Ltd.  (Included  as Exhibit 3.2 to  Registration  Statement  No.
          33-43278-01 on Form S-11 and incorporated herein by reference.)

     4.1  Affidavit and  Certificate  of Limited  Partnership of CNL Income Fund
          XII,  Ltd.  (Included  as Exhibit 3.2 to  Registration  Statement  No.
          33-43278-01 on Form S-11 and incorporated herein by reference.)

     4.2  Amended and Restated  Agreement of Limited  Partnership  of CNL Income
          Fund XII,  Ltd.  (Included  as Exhibit 4.2 to Form 10-K filed with the
          Securities and Exchange Commission on April 15, 1993, and incorporated
          herein by reference.)

     10.1 Management  Agreement  between  CNL  Income  Fund  XII,  Ltd.  and CNL
          Investment  Company  (Included as Exhibit 10.1 to Form 10-K filed with
          the  Securities  and  Exchange  Commission  on  April  15,  1993,  and
          incorporated herein by reference.)

     10.2 Assignment of Management  Agreement from CNL Investment Company to CNL
          Income Fund  Advisors,  Inc.  (Included  as Exhibit  10.2 to Form 10-K
          filed with the Securities  and Exchange  Commission on March 31, 1995,
          and incorporated herein by reference.)

     10.3 Assignment of Management Agreement from CNL Income Fund Advisors, Inc.
          to CNL Fund  Advisors,  Inc.  (Included  as Exhibit  10.3 to Form 10-K
          filed with the  Securities  and Exchange  Commission on April 1, 1996,
          and incorporated herein by reference.)

     10.4 Assignment of Management Agreement from CNL Fund Advisors, Inc. to CNL
          APF Partners, LP. (Filed herewith.)

     (b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter ended June 30, 2001.




                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 9th day of August, 2001.


               By:       CNL INCOME FUND XII, LTD.
                         General Partner


                        By:            /s/ James M. Seneff, Jr.
                                       -----------------------------------------
                                       JAMES M. SENEFF, JR.
                                       Chief Executive Officer
                                       (Principal Executive Officer)


                        By:            /s/ Robert A. Bourne
                                       -----------------------------------------
                                       ROBERT A. BOURNE
                                       President and Treasurer
                                       (Principal Financial and
                                       Accounting Officer)